The act of converting a Large Town into a Castle significantly changes the way that the settlement will work, and what you can build there. Once converted to a castle, this settlement can be upgraded to a fortress as soon as you have the money required, rather than relying upon the population to make it grow. It will also be able to recruit cavalry and missile infantry, units that cities do not produce. This comes at a price however, castles are not conducive to open trade, and the settlement will generate less income as a whole. More importantly buildings that can only exist in a city will be destroyed in the conversion process – Check the building browser to see what structures will and won’t survive.